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AP Microeconomics

Subjects : economics, ap
Instructions:
  • Answer 50 questions in 15 minutes.
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  • Match each statement with the correct term.
  • Don't refresh. All questions and answers are randomly picked and ordered every time you load a test.

This is a study tool. The 3 wrong answers for each question are randomly chosen from answers to other questions. So, you might find at times the answers obvious, but you will see it re-enforces your understanding as you take the test each time.
1. When firms focus their resources on production of goods for which they have comparative advantage






2. Demand for a resource like labor is derived from the demand for the goods produced by the resource






3. Consumer income - prices of substitute and complementary goods - consumer tastes and preferences - consumer speculation - and number of buyers in the market all influence demand






4. The output where ATC is minimized and economic profit is zero






5. The lost net benefit to society caused by a movement away from the competitive market equilibrium






6. The total quantity - or total output of a good produced at each quantity of labor employed






7. The marginal utility from consumption of more and more of that item falls over time






8. Ed = 1






9. Occurs when LRAC is constant over a variety of plant sizes






10. Ed = 0 - no response to price change






11. A period of time too short to change the size of the plant - but many other - more variable resources can be changed to meet demand






12. Two goods are consumer complements if they provide more utility when consumed together than when consumed separately






13. Another way of saying that firms are earning zero economic profits or a fair rate of return on invested resources






14. The difference between total revenue and total explicit and implicit costs






15. The difference between total revenue and total explicit costs






16. The most desirable alternative given up as the result of a decision






17. The imbalance between limited productive resources and unlimited human wants






18. Measures the cost the firm incurs from using an additional unit of input. In a perfectly competitive labor market - MRC = Wage. In a monopsony labor market - the MRC > Wage






19. Production inputs that cannot be changed in the short run. Usually this is the plant size or capital






20. The price of a good measured in units of currency






21. MUx / Px = MUy/Py or MUx/MUy = Px/Py






22. Entry (or exit) of firms does not shift the cost curves of firms in the industry






23. Excess demand; a shortage exists at a market price when the quantity demanded exceeds the quantity supplied






24. Models where firms agree to mutually improve their situation






25. Ed = 8 - infinite change in demand to price change






26. Direct - purchased - out-of-pocket costs paid to resource suppliers provided by the entrepreneur






27. In the case of a public good - some members of the community know that they can consume the public good while others provide for it. This results in a lack of private funding and forces the government to provide it






28. The firm hires the profit maximizing amount of a resource at the point where MRP = MRC






29. Excess supply; exists at a market price when the quantity supplied exceeds the quantity demanded.






30. AFC = TFC/Q






31. A period of time long enough to alter the plant size. New firms can enter the industry and existing firms can liquidate and exit






32. The additional benefit received from the consumption of the next unit of a good or service






33. Additional costs to society not captured by the market supply curve from the production of a good - result in a price that is too low and a market quantity that is too high. Resources are overallocated to the production of this good






34. A per unit tax on production results in a vertical shift in the supply curve by the amount of the tax






35. The number of units of any other good Y that must be sacrificed to acquire good X. Only relative prices matter






36. For one good - constrained by prices and income - a consumer stops consuming a good when the price paid for the next unit is equal to the marginal benefit received






37. Goods that are both nonrival and nonexcludable. One person's consumption does not prevent another from also consuming that good and if it is provided to some - it is necessarily provided to all - even if they do not pay for that good






38. Additional benefits to society not captured by the market demand curve from the production of a good - result in a price that is too high and a market quantity that is too low. Resources are underallocated to the production of this good






39. 0 < Ei < 1






40. The upward part of the LRAC curve where LRAC rises as plant size increases. This is usually the result of the increased difficulty of managing larger firms - which results in lost efficiency and rising per unit costs.






41. The downward part of the LRAC curve where LRAC falls as plan size increases. This is the result of specialization - lower cost of inputs - or other efficiencies of larger scale.






42. Ex -y = (%dQd good X) / (%d Price Y). If Ex -y > 0 - goods X and Y are substitutes. If Ex -y < 0 - goods X and Y are complementary






43. The ability to set the price above the perfectly competitive level






44. TR = P * Qd






45. Models where firms are competitive rivals seeking to gain at the expense of their rivals






46. The difference between the monopolistic competition output Qmc and the output at minimum ATC. Excess capacity is underused plant and equipment






47. The difference between the price received and the marginal cost of producing the good. It is the area above the supply curve and under the price






48. Ei > 1






49. Exists if a producer can produce more of a good than all other producers






50. Exists if a producer can produce a good at lower opportunity cost than all other producers